What does variable interest entity mean on the CPA exam?
Variable interest entity. An entity that cannot fund itself without further support, or whose equity holders lack the usual powers. Consolidation turns on control rather than on owning a majority of the votes.
Defined against ASC 810-10-15-14.
Which CPA exam sections use variable interest entity?
Variable interest entity appears in the BAR section of the CPA exam.
Other terms defined against ASC 810-10
- noncontrolling interest: The share of a subsidiary that the parent does not own.
- primary beneficiary: The party that must consolidate a variable interest entity: the one with power over its significant activities AND exposure to losses or returns that could be significant.
Other names for variable interest entity
VIE
Related terms
- reporting entity: The unit whose statements are being presented, including everything it controls.
- control environment: The governance and management functions and the attitudes, awareness, and actions of those charged with governance and management concerning the entity's system of internal control.
- senior management: The people who direct and control the entity day to day, as distinct from those charged with governance, whose job is to oversee them.
- service organization: A third party whose processing affects a user entity's financial reporting, such as a payroll bureau or a claims processor.
- partnership interest: A partner's stake in the partnership itself, distinct from any interest in its underlying assets.
- rights and obligations: The assertion that the entity genuinely owns the assets it reports and genuinely owes the liabilities.